Cub copy saves struggling stores.
Although the Cub concept of supermarketing was initially the sole province of Super Valu, the idea is now being borrowed by other wholesalers.
One of the most excited about the Cub approach is Associated Grocers of Seattle, which supplies 290 markets in the Pacific Northwest, including the three new Price Chopper stores operated by Gordon Martin and Paul Meyer in the Tri-Cities area of eastern Washington.
"We have been having problems during the past year due to a slowdown in the economy and tough competition from the chains," admits Meyer. The economic misery was caused by the mothballing of a nuclear power plant, which increased the unemployment rolls by 12,000. Despite the economic climate, three Buttrey stores, an Albertson's, a Fred Meijer and a Safeway have all opened during the past few years.
"Our volume had fallen dangerously close to the breakeven point," says Meeyr, whose three units operated as quasi-warehouse Mark 'n Pack stores. The co-owners consulted Associated Grocers, their long-time wholesaler, to help solve the volume problem. The wholesaler's market survey revealed potential for a Cub-style unit.
To launch its entry into the hybrid warehouse arena, AG hired Don Jackson from Super Valu. Working closely with the partners, Jackson developed a program to convert the two 30,00- and one 25,000-square-foot stores into hybrid markets. The reborn Price Chopper stores opened in October 1983.
"We had to create a low-price image in order to survive," says Meyer. "This image had to be communicated through advertising to attract people into the store and had to be reinforced by store appearance and prices when consumers came."
Price Chopper inaugurated its changeover by blitzing the television and radio airwaves with ads explaining why its prices are lower than the chains. The stores offered shoppers triple their money back if they could purchase 25 or more items at any other supermarket for a lower price.
Within the stores, the conventional gondolas were replaced by warehouse-style shelving. But the most extensive alterations occurred in produce and its new companion department--bulk foods. All non-refrigerated produce tables were replaced by cardboard bins that look like shipping crates. Produce distribution has jumped by one and a half percentage points since the remodeling.
The 225 items in the bulk food department are doing even better than expected, accounting for approximately 3.6% of sales at the three stores, with an average gross margin of 30%. "Our bulk food departments are performing better than most delis," Meyer notes.
As of January, volume at the three stores was running $260,000, $210,000 and $160,000 a week, respectively, 76% higher on average than the previous year. AG plans to soon implement the Price Chopper program in other Pacific Northwest supermarkets.
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|Title Annotation:||wholesale programs and services|
|Date:||Mar 1, 1984|
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